$FCOB 1st Colonial Bancorp, Inc. Reports First Quarter 2022 Net IncomePress Release | 04/26/2022
1st Colonial Bancorp, Inc. (FCOB), holding company of 1st Colonial Community Bank, today reported net income of 1.7 million, or $0.34 per diluted share, for the three months ended March 31, 2022 compared to net income of $1.7 million, or $0.33 per diluted share, for the three months ended March 31, 2021.
Robert White, President and Chief Executive Officer, commented, “Our results for the first quarter show our continued financial strength and momentum, led by a significant increase in net interest income due to solid loan growth. We have been focused on replacing the non-recurring PPP revenue and the elevated mortgage revenue from the historically high volume of mortgage refinancing activity.”
“Loan demand remains strong in both commercial and consumer lending, with consumer being driven by purchase activity. Housing sales remain robust in our markets with inventory still low and demand remaining high. We continue to monitor new loan application volumes to measure further impact associated with the Federal Reserve’s decision to increase short-term rates in an attempt to reduce or control current inflation. We are also closely monitoring and managing our operating costs to limit the impact of high inflation on our bottom line.”
“Our team is committed to delivering exceptional products and services through multiple distribution channels to support the needs of our customers.”
Operating Results
Net Interest Income
Net interest income for the three months ended March 31, 2022 and 2021 was $5.8 million and $4.8 million, respectively. The increase in net interest income was primarily attributable to a $1.0 million increase in interest income on average loans outstanding. For the first quarter of 2022, average loan balances increased $78.5 million to $513.8 million from $435.3 million for the first quarter of 2021. When compared to the fourth quarter of 2021, net interest income declined $296 thousand from $6.1 million, which was directly related to a $435 thousand decline in net loan origination income on the SBA’s Paycheck Protection Program (“PPP”) loans. Average PPP loans outstanding declined from $23.9 million for the quarter ended December 31, 2021 to $8.7 million for the first quarter of 2022.
The net interest margin was 3.46% for the first quarter of 2022 compared to 3.12% for the first quarter of 2021. The improvement in net interest margin was mostly related to an increase in the yield on interest-earning assets coupled with a reduction in the average rate paid on interest-bearing liabilities. The average yield on interest-earning assets grew 22 basis points from 3.63% for the quarter ended March 31, 2021 to 3.85% for the quarter ended March 31, 2022. Also we continue to benefit from the repricing of maturing certificates of deposit (CDs). The average rates paid on CDs declined 42 basis points from 1.33% for the first quarter of 2021 to 0.91% for the first quarter of 2022. When compared to the fourth quarter of 2021, the first quarter 2022 net interest margin declined five basis points from 3.51%.
Loan Loss Provision
For the three months ended March 31, 2022, we recorded a provision to the allowance for loan losses (“allowance”) of $300 thousand compared to $240 thousand for the three months ended March 31, 2021. Net recoveries were $137 thousand for the first quarter of 2022 compared to $142 thousand for the first quarter of 2021. The allowance as a percentage of total loans was 1.37% as of March 31, 2022 compared to 1.38% as of December 31, 2021 and 1.32% as of March 31, 2021.
Non-interest Income
Non-interest income for the first quarter of 2022 was $1.5 million, a decrease of $1.1 million, or 43%, from $2.6 million for the first quarter of 2021. Income from the origination and sales of residential mortgages declined $1.1 million, or 56%, from the first quarter in 2021 due to a $22.3 million, or 30%, decline in originations. Additionally, we retained in our loan portfolio $21.5 million, or 42%, of the $51.0 million in mortgage originations in the first quarter of 2022 compared to $9.2 million, or 13%, of the first quarter of 2021 originations. Mortgage activity was impacted by a drop in refinancing transactions and a lack of inventory in the purchase market. During the first quarter of 2022, we earned $347 thousand in gains on the sale of SBA loans compared to $335 thousand for the comparable 2021 period.
When compared to the fourth quarter of 2021, non-interest income for the first quarter of 2022 declined $653 thousand from $2.1 million. Income from the sales of SBA loans and the origination and sales of residential mortgages declined $349 thousand and $347 thousand, respectively, from their amounts for the fourth quarter of 2021. Mortgage originations declined $4.0 million from $55.0 million for the fourth quarter of 2021 and the loans retained in our loan portfolio grew $4.5 million, or 26% from $17.0 million in the fourth quarter of 2021.
Non-interest Expense
Non-interest expense was $4.6 million for the quarter ended March 31, 2022, representing a $228 thousand decline, or 4.7%, from $4.8 million for the quarter ended March 31, 2021. Reductions in professional fees and impaired loan expenses were the primary causes for the improvement in non-interest expenses.
When compared to the fourth quarter of 2021, non-interest expense for the first quarter of 2022 declined $517 thousand from $5.1 million. Reductions in professional fees, lending expenses and impaired loan expenses were the primary cause for the improvement in non-interest expenses.
Income Taxes
For the first quarter of 2022, income tax expense was $707 thousand compared to $662 thousand for the first quarter of 2021. A $101 thousand decline in tax-free interest income on our municipal investments negatively impacted income tax expense.
Financial Condition
Assets
As of March 31, 2022, total assets were $697.8 million and grew $15.0 million from $682.8 million as of December 31, 2021.
Total loans were $535.2 million as of March 31, 2022, an increase of $33.3 million, or 6.6%, from $501.9 million as of December 31, 2021. During the first quarter, commercial loans, including commercial real estate and construction and excluding PPP loans, grew $23.1 million. Residential mortgages and home equity loans and lines of credit increased $20.8 million. PPP loans declined $10.3 million to $3.7 million as of March 31, 2022. Residential mortgages held for sale grew $1.4 million from $10.0 million as of December 31, 2021 to $11.4 million as of March 31, 2022.
Liabilities
Total deposits were $626.0 million as of March 31, 2022, and grew $15.5 million, or 2.5%, from $610.5 million as of December 31, 2021. Municipal deposits and interest checking accounts increased $33.0 million and $2.0 million, respectively. Certificates of deposit and demand deposits declined $9.6 million and $8.7 million, respectively.
Shareholder’s Equity
Total shareholders’ equity was $56.6 million as of March 31, 2022, compared to $57.8 million as of December 31, 2021. During the first quarter of 2022, the net unrealized loss in our investment portfolio caused a $2.8 million decline in accumulated other comprehensive income (“AOCI”) from $272 thousand as of December 31, 2021 to an accumulated other comprehensive loss of $2.5 million as of March 31, 2022. The decline in AOCI was caused by higher interest rates and the widening spreads in our government agency sponsored bonds and mortgage-backed securities. We have minimal credit risk in the investment portfolio. As a result of the decrease in shareholders’ equity, tangible book value per share decreased $0.22, or 1.8%, from $12.23 as of December 31, 2021 to $12.01 as of March 31, 2022.
Asset Quality
Non-performing assets as of March 31, 2022 were $3.3 million compared to $3.5 million as of December 31, 2021. The ratio of non-performing assets to total assets as of March 31, 2022 was 0.48% compared to 0.52% as of December 31, 2021. As of March 31, 2022, the allowance was $7.3 million, or 1.37% of total loans. The allowance to non-accrual loans was 220.9% as of March 31, 2022, compared to 195.9% as of December 31, 2021.
Income Statement and Other Highlights:
Highlights as of March 31, 2022 and December 31, 2021, and a comparison of the three months ended March 31, 2022 to the three months ended March 31, 2021 include the following:
1st COLONIAL BANCORP, INC.
CONSOLIDATED INCOME STATEMENTS
(Unaudited, dollars in thousands, except per share data)
For the three months
ended March 31,
2022
2021
Interest income
$
6,421
$
5,546
Interest expense
650
773
Net Interest Income
5,771
4,773
Provision for loan losses
300
240
Net interest income after provision for loan losses
5,471
4,533
Non-interest income
1,480
2,595
Non-interest expense
4,585
4,813
Income before taxes
2,366
2,315
Income tax expense
707
662
Net Income
$
1,659
$
1,653
Earnings Per Share – Basic
$
0.35
$
0.33
Earnings Per Share – Diluted
$
0.34
$
0.33
SELECTED PERFORMANCE RATIOS:
For the three months
ended March 31, 2022
For the three months
ended March 31, 2021
Return on Average Assets
0.96
%
1.04
%
Return on Average Equity
11.69
%
12.43
%
Book value per share
$
12.01
$
11.04
As of March 31, 2022
As of December 31, 2021
Bank Capital ratios:
Tier 1 Leverage
9.60
%
9.22
%
Total Risk Based Capital
14.45
%
15.37
%
Common Equity Tier 1
13.20
%
14.11
%
1st COLONIAL BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
As of March 31, 2022
As of December 31, 2021
Cash and cash equivalents
$
26,128
$
40,877
Total investments
106,864
111,807
Mortgage loans held for sale
11,418
9,957
Total loans
535,224
501,883
Less allowance for loan losses
(7,343
)
(6,906
)
Loans and leases, net
527,881
494,977
Bank owned life insurance
16,263
16,160
Premises and equipment, net
993
1,072
Accrued interest receivable
1,680
1,664
Other assets
6,558
6,320
Total Assets
$
697,785
$
682,834
Total deposits
$
625,984
$
610,477
Subordinated debt
10,449
10,440
Other liabilities
4,778
4,100
Total Liabilities
641,211
625,017
Total Shareholders’ Equity
56,574
57,817
Total Liabilities and Shareholders’ Equity
$
697,785
$
682,834
1st COLONIAL BANCORP, INC.
NET INTEREST INCOME AND MARGIN
(Unaudited, in thousands, except percentages)
For the three months ended
For the three months ended
March 31, 2022
March 31, 2021
Average
Balance
Interest
Yield
Average
Balance
Interest
Yield
Cash and cash equivalents
$
41,227
$
15
0.15
%
$
27,625
$
7
0.10
%
Investment securities
110,342
378
1.39
%
135,255
461
1.38
%
Mortgage loans held for sale
11,016
81
2.98
%
22,255
120
2.19
%
Loans
513,770
5,947
4.69
%
435,271
4,958
4.62
%
Total interest-earning assets
676,355
6,421
3.85
%
620,406
5,546
3.63
%
Non-interest earning assets
22,633
21,370
Total average assets
$
698,988
$
641,776
Interest-bearing deposits
NOW and money markets
$
283,404
$
86
0.12
%
$
250,347
$
117
0.19
%
Savings
129,219
92
0.29
%
117,507
84
0.29
%
Certificates of deposit
122,900
275
0.91
%
114,454
375
1.33
%
Total interest-bearing deposits
535,523
453
0.34
%
482,308
576
0.48
%
Borrowings
10,535
197
7.58
%
12,735
197
6.27
%
Total interest-bearing liabilities
546,058
650
0.48
%
495,043
773
0.63
%
Non-interest bearing deposits
91,335
88,649
Other liabilities
4,026
4,142
Total average liabilities
641,419
587,834
Shareholders' equity
57,569
53,942
Total average liabilities and equity
$
698,988
$
641,776
Net interest income
$
5,771
$
4,773
Net interest margin
3.46
%
3.12
%
Net interest spread
3.37
%
3.00
%
1st Colonial Community Bank, the subsidiary of 1st Colonial Bancorp, provides a range of business and consumer financial services, placing emphasis on customer service and access to decision makers. Headquartered in Collingswood, New Jersey, the Bank has branches in Westville, New Jersey and Limerick, Pennsylvania. The bank also has a loan production office in Haddonfield, New Jersey and administrative offices in Cherry Hill, New Jersey. To learn more, call (877) 785-8550 or visit www.1stcolonial.com.
This release contains forward-looking statements that are not historical facts and include statements about management’s strategies and expectations about our business. There are risks and uncertainties that may cause our actual results and performance to be materially different from results indicated by these forward-looking statements. Factors that might cause a difference include the extent of the adverse impact of the current global coronavirus outbreak on our customers, prospects and business, as well as the impact of any future pandemics or other natural disasters; economic conditions including rising inflation and supply chain shortages; civil unrest, rioting, acts or threats of terrorism, or actions taken by the local, state and Federal governments in response to such events, which could impact business and economic conditions in our market area; unanticipated loan losses; inability to close loans in our pipeline; lack of liquidity; varying and unanticipated costs of collection with respect to nonperforming loans; an inability to dispose of real estate owned; changes in interest rates, changes in FDIC assessments, deposit flows, loan demand, and real estate values; changes in relationships with major customers; operational risks, including the risk of fraud by employees, customers or outsiders; competition; changes in accounting principles, policies or guidelines; changes in laws or regulations and in the manner in which the regulators enforce same; new technology and other factors affecting our operations, pricing, products and services.
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